Themes in US Bank Supervision and Enforcement

In a recent Westlaw Today commentary published in Reuters, Moore & Van Allen lawyers Kathryn Wellman, Ed O’Keefe, and John Stoker examine how US banking regulators are refocusing supervision and enforcement on “material financial risk” and the effectiveness of risk management, with less emphasis on technical or procedural shortcomings. 

In August 2026, the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) finalized a rule under which an “unsafe or unsound practice” must involve actual or likely material financial harm to an institution or risk of loss to the Deposit Insurance Fund. The Federal Reserve Board (FRB) similarly revised its Statement of Supervisory Operating Principles in April 2026 to condition supervisory findings and enforcement actions on the probability of “significant or abnormal financial harm.”

Despite this narrowing, the authors say Bank Secrecy Act (BSA) and anti-money laundering (AML) enforcement remains a priority because “violations of law remain an independent statutory basis for enforcement action.” Recent actions have also focused on core financial condition issues, including capital adequacy, liquidity management, asset quality, and interest rate risk. The authors note that two institutions subject to such actions subsequently failed, suggesting regulators remain willing to intervene formally when serious weaknesses threaten a bank’s financial condition.

The authors also see potential for greater divergence across agencies. The OCC and FDIC pursued reform through “notice-and-comment rulemaking,” which “may prove more durable than the FRB’s implementation of its standards through supervisory guidance.” Terms including “materiality,” “significance,” and “abnormality” remain largely undefined, leaving room for agencies to interpret and apply them differently.

The authors conclude that informal supervisory feedback remains important even when issues do not rise to the level of formal enforcement. Banks should therefore view the changes as “a refocusing, not a reduction, of supervisory expectations,” they explain.